Lower-than-expected tax take continues to erode NZ government finances
The government took in less revenue than expected from income tax, company tax and GST in the eight months ended Feb. 29, widening its operating deficit more than forecast.
The operating balance before gains and losses was $5.5 billion, or $395 million higher than forecast, the Treasury said in a statement. While core Crown expenditure was $1.4 billion below expectations, that was offset by core Crown revenue being $1.2 billion below its estimate.
The government’s three main tax types continued to run below forecast in the first eight months of the year, the Treasury said.
Source deductions were $200 million below forecast “as the labour market and employment and wage growth have been weaker than expected,” the Treasury’s chief financial officer Fergus Walsh said.
Corporate tax was $193 million below forecast “as business profitability was weaker that expected,” he said.
Goods and services tax was $369 million below forecast, though much of this reflected above-forecast earthquake-related insurance refunds and excluding these, the tax take from GST was near to expectations, the Treasury said.
The operating balance was a deficit of $8.8 billion, which was 16.5 percent, or $1.3 billion more than expected, reflecting higher actuarial losses on the Government Superannuation Fund and ACC liabilities that were $329 million more than expected.
Total tax revenue in the first eight months of the fiscal year was $35.35 billion, compared to a forecast in the PREFU of $36.18 billion.
Core Crown expenses of $45 billion were below the forecast of $45.5 billion.
Gross debt of $75.98 billion amounted to 37 percent of gross domestic product, while net debt of $48.99 billion was equal to 24 percent of GDP.
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